Union Budget 2021: Standard Deduction Limit Can Be Increased To Rs. 1 Lakh
In the upcoming budget 2021 i.e. less than a week away, there may be expected a hike in standard deduction limit which shall come as a relief to middle class salaried taxpayers. Standard deduction is a fixed deduction allowed to certain assessees and was re-introduced in the budget of 2018-19 first with the available standard deduction of Rs. 40000. And thereafter the limit was enhanced to Rs. 50000.
The FICCI is of the view that the standard deduction for salaried class should be increased to Rs. 1,00,000 and this shall give boost to consumption in the current pandemic hit economy. And this being sought as the pandemic has led to mass-scale working from home, leading to an increasing cost for employees who have to incur a higher cost of electricity as well as other expenditures such as on internet and other fixture and furniture. The standard deduction that was re-introduced was a replacement to the medical and transport allowance..
"In 2020, the government has taken a lot of measures to revive the economy, the taxpayers are now waiting eagerly for a pleasant surprise at the end of the year with this budget in the form of some substantial rebate. This 'rabbit in the hat' moment by the government for the taxpayers can be in the form of decreasing the rate of income tax or increasing the threshold and by increasing the standard deductions as allowed under the Income Tax Act," said Aditya Chopra, Managing Partner, Victoriam Legalis. CII also advocates a hike in standard deduction in view of an increase in inflation.
Confederation of Indian Industry (CII) also thinks that the limit of standard deduction should be substantially increased in the Union Budget 2021 in the view of the rising inflation.